here's the link http://www.irs.gov/pub/irs-irbs/irb09-06.pdf I would either refer them to the official link or have them consult a tax advisor. Also, there are many seminars going on these days that cover these items. Maybe your company can get together with a tax advisor and hold a seminar regarding these issues. There are so many consumer questions out there! We are having one this Saturday and I plan on asking the rep a lot of questions, yours being one of them!

If they file jointly they will split the credit. However, if they file separately the "primary" will receive the credit. The primary will be the person with the lowest credit score. This info came from my mortgage lender.

What if one has owned a home in the past 3 years and the other hasn't??

Good question.
If the person who is on the mortgage has not owned a home they qualify. If they both have to be on the loan then no $8000 tax credit. But check with a accountant or tax pro to be sure.

Well I think the Primary would be the higher income, not the lowest credit score and as far as if one ha owned a home and one hasn't, i think that would make them ineligable.

That's what I figured. I've heard different answers from different people on that one. I am REALLY looking forward to our local q and a this Saturday and I'll be sure to ask those questions!

Michael- interesting question and a mix of answers. I'm still confused as to what the correct response is. It'd be great to see what other agents think.

Sharon,

Even the answers I got at the last tax seminar were confusing! I went to turbo tax and they have a very good chart explaining the process but of course, there are disclaimers there. When you go to the irs site and find the information, there is a link directing you from there to the Wall Street Journal for a news release! I have read in many places that "The IRS says that the taxpayers can allocate the credit in any “reasonable” manner as long as they don’t give the credit to someone who is ineligible for the credit". No sure if i'm allowed to post the link here but will if you say so!

Michael,

This question is for tax experts. Real estate licensees have no expertise to answer this question even they are trained and given the correct answer.


At least in CA, All the real estate licensees who do not have related tax license, please, pay attention on it. Two main notice should be disclosed with your answer. First, disclose that you are real estate licensee only. Second, What you say here is not your tax advice.

On the reversed way, if non-licensed persons practice real estate without real estate license, that might become crime in CA.

Andy

Like some of us have posted, you really need to check with the irs site. At this time, the clear explainations are hard to find. I would keep going to the irs site until they post a clear answer. When I looked at the turbo tax site, there was a good explanation but when I went to the official government site, no searches would give me the page to the same information. If anyone finds the exact, official link, please let us know.

Best advice, check out the new IRS Form 5405 at http://www.irs.gov/pub/irs-pdf/f5405.pdf. This is the actual application for the credit, to be attached to the 1040. It outlines specifically who is and who is not eligible. The form was revised in Feb 2009 to apply to the new $8000 credit. It explains, in detail, the differences between the old credit and the new, and this form can be used for either. This is a great resource, and should help you.

As always, I am a Real Estate Professional, not a CPA, but I do my homework to better serve my clients and colleagues. Best wishes.

Tim,

i tried the site you have linked and it says http 404 file not found.. Also, the additional links send you to last years home buyer credit info. Can you double check that?


Thanks

Lori,

I just tried the link from below, and it errored. I restarted my browser, came back, and tried again, and it worked fine. Here is the link again, just in case: http://www.irs.gov/pub/irs-pdf/f5405.pdf

Worst case scenario, Go to my website http://www.timwhitehomes.com, and I have a blog with the details and links.

If you still can't find it, I can email you the Adobe .pdf file. Let me know.

Refer them to an expert, their tax preparer or attorney, regardless of how close they are
as an unmarried couple. The reprecussions later on could be unexpected. A responsive agent has already provided the official fed weblink for into but still see a human being (and don't count on a call-in
staffer at the IRS to give you the right answer).

Good luck. The $8K tax credit is a good incentive for
first timers or those who haven't owned a home for 3 years but it should not be the only reason to buy a home. Buy one for your future! Not your next tax return.

Thanks, Tim. Although, after reading about the new computer virus, i'm tempted to stay off all links today after this! Maybe I'm being paranoid....

if both names are on the mortage, they would most likely have to split it. It also depends on their income

OK, this is directly from the form 5405-First-Time Homebuyer Credit that is attached to Form 1040. Please don't anyone construe this as 'tax advice' or 'advice outside my profession' it's straight off the form!

Part II section 1 refers to the 'instructions' which read 'If two or more unmarried individuals buy a main home, they can allocate the credit among the individual owners using any reasonable method. the total amount allocated cannot exceed the smaller of $7,500 ($8,000 if you purchased your home in 2009) or 10% of the purchase price. Note. A reasonable method is any method that does not allocate all or a part of the credit to a co-owner who is not eligible to claim that part of the credit.'


I don't see (and didn't expect to see) any notation about credit score or evenly splitting, etc., This is off the form revised 2-2009. It seems pretty straight forward on the form and there is a lot more info on it that is very helpful.

As per the IRS instructions for completing IRS Form 5405 for claiming the credit:
Line 1. If two or more unmarried individuals buy a main
home, they can allocate the credit among the individual
owners using any reasonable method. The total amount
allocated cannot exceed the smaller of $7,500 ($8,000 if
you purchased your home in 2009) or 10% of the
purchase price. See Purchase price on page 3.
Part II Credit
Note. A reasonable method is any method that does not
allocate all or a part of the credit to a co-owner who is
not eligible to claim that part of the credit.

They both can get a portion of the credit providing they meet the guidlines and qualify as first time homebuyers. The last answer was very good and used appropriate references. The answers will soon be more clearly forthcoming. Both NAR and the National Home Builders have brochures available that you an distribute to your clients. The have the appropriate disclaimers , not being tax experts, etc. Realtor.org also has the entire law and the forms necessary to apply for the loan. see web link below.
Good Selling!

I realize this can be confusing as I have just gone through the same process, this is what I did to remedy the situation, I called the IRS, they referred me to their legal department who then sat down with the rules and tested my answers against the rules to determine that even though me and my husband had owned a home within the last three yrs My father had not and since we were all listed on the documents as purchasers, my father was eligible for all of the available credit which is 8000 or ten percent of the purchase price which ever one is lowest. In our case my father received 5990 from the IRS as the purchase price of the home was 59900. Here's the rules as I understand it: You must purchase between now and Dec 1, 2008 to qualify. You can either file it on this yrs return if bought before Oct. 15 (you can amend your return), or you can wait and take the credit next year on your taxes, the credit is not required to be paid back like Bush's credit was as long as the purchaser lives in the home as their primary residence for the next three years. In our case we are all three purchasing the home and residing in the home as our primary residence. If my father was just a co signer not living in the home he could not take the credit. Also there are income restrictions that can eliminate or reduce the amount of the credit. The worksheet will help you determine that. The primary or secondary first time homebuyer can qualify for the credit based on their individual income meaning that in the case of the unmarried couple who is purchasing the home together as long as both parties are living in the home and both fall below the income restrictions then they can choose to split the tax credit receiving fifty percent of it allocated on both returns or applied to their tax debt. If one has a higher income that will reduce or eliminate the credit and the other has a lower income qualifying then the lower income can choose to take the entire credit. The rules are rather lax and the reason is because this is to stimulate our economy, those who manage to pull off buying a house with the stricter credit requirements will definitely be putting money into our economy to help trickle down through the masses. So my advice is if you are confused and want to help out your clients, call the IRS instead of trying to wade through the info on the internet that can be muddled with persons attempting to answer who are just as confused as your are. But the guidelines are simple to understand once you have to apply it to a situation that affects you personally.

Thanks Tim, The IRS form 5405 is a great help to explain how this works.

Michael,

Great question! Based on some of the feedback there are some differring answers and thoughts. Check out the link below for the Kipplinger Tax Letter that addressed this very issue back in January of this year. I always like to go to the experts when it comes to tax advise, so make sure you check with an accountant but the Kipplinger Tax Letter is worth a read.

Hope this helps.

I agree, I have not seen anything on the 5405 form that has anything about credit scores. I would suggest looking at the form. If you are unable to locate one, I would be happy to scan you a copy.
I also believe, you do not buy a home because of a tax credit! It is an incentive, which is great, if you are looking to buy a home!
barbara@powerteamtexas.com http://www.txexperiencedrealty.com http://www.bcapobianco.remax-texas.com

I'm not a tax expert but was not aware unmarried people could file a 'joint tax return'. I've never heard of this.

Actually the federal government website that explains everything is: http://www.federalhousingtaxcredit.com/2009/home2.html

It looks like the State of Ga is going to be giving a tax credit, as well.

Looks like the perfect time to buy to me!!!

~Carol

An unmarried couple cannot file jointly, so the second answer is not correct. And no where have I found a reference to credit scores having anything to do with who gets the credit.

It's my understanding you can split the credit if both buyers qualify.

However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.


3.How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.


4.Are there any income limits for claiming the tax credit?
Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

If either one has not purchased or owned a home in the past 3 years, (and you can't sell it in the next 3) you can split the credit between them (10 % purchase price or 7,500 - 8,000.), or allocate it between them. They do not have to pay it back. If they purchase this year (2009), they can ammend their taxes, if already filed. File an extension if currently in escrow (if they don't owe taxes) wait until COE and then file, receive the money now. Or, wait until next year and receive it in 2010, for (2009) refund.
Cerise
Broker/ Lic Tax Preparer

They would split the credit between them if they each have an equal share in the property. The maximum credit is $8000 or 10% of the purchase price, which ever is lower. Therefore, they could each claim up to $4000 for the credit provided they wait and file it with their 2009 taxes.

No one can file jointly a tax return unless they are MARRIED.

OK so if they can share the credit half (50-50), are they going to divide the property taxes, mortgage insurance premium and all other HUD info in half too. Or both can put the full amount in both their tax forms?